Aeroflot forecasts $315M net profit by year-end

In his report to Russian President Vladimir Putin, the national carrier's CEO Vitaliy Savelyev elaborated on the airline's achievements and strategic goals (Photo by Russian Presidential Administration)

Russia’s largest airlines alliance – Aeroflot Group will register 20 billion rubles (ca. $315 million) of net profit this year, Aeroflot’s general director Vitaly Saveliev reported during his meeting with Russian President Vladimir Putin yesterday. He promises to pay out about 50% of it in dividends to the shareholders including the Russian government that holds 51% stake.

Saveliev explained the positive results were achieved due to cost management. “We have been able to significantly cut our costs so that even with our modest revenues we are able to remain profitable. This cost-cutting effort makes us feel quite confident on the market”, he said. Aeroflot’s capitalization reached a historical peak of 116 billion rubles.

Saveliev mentioned that, despite the overall decline on the Russian market, the parent airline is expected to show a 10% growth in passenger traffic. Aeroflot will handle 28.9 million passenger alone whereas the entire group’s traffic in 2016 is to reach 43.4 million people. The airline carried 26.1 million passengers (on domestic and international flights combined) in 2015.

Aeroflot director specifically pointed out the success of the company’s low-cost subsidiary Pobeda. He estimates that this year it will service 4 million passengers and will turn profitable sooner than was initially expected. “This year Pobeda will bring more than 2 billion rubles of net profit,” Saveliev forecast. “We want our Pobeda to become the Russia’s third largest airline and we will pursue this goal in the near future,” he added. However, today the low-cost airline holds sixth position in the rating of Russian airlines in terms of traffic.

The head of Aeroflot also elaborated on the company’s strategic goals. “We have really good chances to enter the top-20 of the best airlines of the world. We are looking into 5 stars from Skytrax. In order to achive this we will need to do a lot both on the ground and in the air. We will continue to digitalize our business processes because we all are on the verge of both Big Data and everything that is related to big amount of information which is used for increasing the passenger flow. Besides, we want at least 40% of our fleet to consist of Russian-made aircraft,” summarized Saveliev.

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